The Metro Manila office sector remains robust with a net take up for the first six months of 2018 already outpacing FY 2017 figures. 

Midway through 2018, Colliers recorded a net take-up of 641,000 sqm, already higher than the 638,000 sqm posted for the entire 2017. For 2018, Colliers expects a little over 1 million sqm of net take up, the highest in Metro Manila’s history.

At a glance

• Non-BPO sector covered 34% of all transactions in 1H 2018, more than 250,000 sqm. 
• Philippine economy expanding by an average 6.3% per annum since 2010.
• "Philippine economy expected to grow between 6.5% and 7% per annum over next 3 to 6 years." 
• Approximately, 30,000 sqm of leasable space was completed during the first six months of 2018.
• From 2019 to 2021, Colliers project the completion of about 820,000 sqm of new office space per year.
• Colliers projects Metro Manila office sector to post a 5% vacancy by end-2018

Dom Fredrick Andaya, Colliers International Philippines Director for Office Services told WILLIAMS MEDIA that "Colliers attributes the higher-than-expected take up to a number of factors. Among the key contributors is the expansion of business process outsourcing (BPO) companies that held off plans in 2017. For 1H 2018, demand from both knowledge process outsourcing (KPO) and BPO firms slightly picked up, accounted for 42% of total transactions or more than 322,000 sqm (3/5 million sq ft), almost double compared to year-ago figures. This indicates that occupiers' initial concerns have already been resolved."

"Transactions in 1H 2018 remain diversified and Colliers believes that this bodes well for the Manila office sector moving forward," he added. 

Strong demand from non-outsourcing firms

The demand from non-BPO and traditional occupants remains robust. This sector, which includes government agencies, covered 34% of all transactions in the first half of 2018 or more than 250,000 sqm (2.7 million sq ft).

The Philippine economy has been expanding by an average of 6.3% per annum since 2010. This robust growth reflects not just the sustained dynamism of the BPO-led Services sector but also the expansion of other key economic sub-sectors such as construction, telecommunications, banking and finance, warehousing and logistics, and manufacturing. Companies engaged in these businesses were compelled to expand and thus occupy larger high-quality office space.

“The Philippine economy is projected to grow between 6.5% and 7% per annum over the next three to six years and this should help sustain the traditional firms’ demand for office space,” said Andaya.

Record-high supply

About 630,000 sqm (6.78 million sq ft) of leasable space was completed during the first six months of 2018. Colliers sees at least 440,000 sqm (4.7 million sq ft) of additional office space being delivered for the remainder of 2018, pushing the 2018 completion to a little over 1 million sqm, another historical high.

From 2019 to 2021, Colliers project the completion of about 820,000 sqm (8.8 million sq ft) of new office space per year. The Bay Area, Fort Bonifacio and Ortigas Center will corner the bulk of the new supply.

Lower vacancy

Colliers projects Metro Manila office sector to post a 5% vacancy by end-2018. Sustained demand should temper the impact of new buildings. Hence, we see vacancy hovering between 5.3% to 6% per annum from 2019 to 2021. Colliers believes that a projected vacancy of between 5% and 6% per year from 2019 to 2021 should provide occupants with wider office space options to choose from.

Colliers believes a 4.1% vacancy, which the Metro Manila office sector recorded after the 2009 Global Financial Crisis up to 2016, hinders companies’ capacity to expand as they do not have an adequate choice of immediately available space.

Click here to view the Colliers International Philippines Quarterly Manila Office Q2 2018 report. 

For more information about office space in the Philippines, phone or email Dom Fredrick Andaya Director for Office Services, or Joey Roi Bondoc Research Manager for Colliers International Philippines via the contact details listed below. 

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